Here comes the competition

I believe crowdsourcing as both a term and as a concept has started to filter into the mainstream. As I wrote in an article for Outsource early this year, accompanying a growth in awareness is also the development of more services and platforms which provide a legitimate alternative to more traditional outsourcing avenues, particularly for smaller companies.

Whilst higher adoption amongst larger corporates is still a long way off, this gradual move to the mainstream is reflected in two recent funding announcements, albeit in slightly different ways. Clearly some investors believe there is mileage in crowdsourcing business models with a total of $14m set for companies Kaggle and DesignCrowd.

Coincidentally both companies originated in Australia and both companies are examples of “competition platforms.” Competition platforms work by displaying challenges set by different organisations with a pre-defined reward. Individual professionals or teams registered to the site enter the competition, the originator who set the challenge selects a winning entry, the winners get the money and the organization then generally owns the IP on the winning entry.

However the type of competitions on Kaggle and DesignCrowd couldn’t be more different. DesignCrowd run competitions for freelance graphic designers, mainly to design smaller items such as logos, T-shirts and web sites, and their main target market are smaller businesses. They have attracted $3m in funding.

The criticism in the past from the graphic design community has been that these competition sites (others include 99Designs.com who also recently received some pretty substantial funding) undermine design professionals by forcing them into submitting “on spec” work that the designers don’t get paid for. There has also been some accusations of plagiarism.

The accompanying statements from DesignCrowd about this round of funding are interesting. They say they have “fixed the problems with crowdsourcing” which are “group think, copying, fairness for designers and quality”. For example one of the ways to make the system fairer for designers is to include more “Participation Payments” – that is ensuring non-competition-winning freelancers receive some money for submitting good designs.

Although participation payments were already in place prior to the new investment, this focus on improving their model feels like a real step in the right direction to addressing some legitimate concerns that perhaps are a barrier to mainstream acceptance, if not the exponential growth DesignCrowd have enjoyed to date.

Meanwhile Kaggle, who have received $11m in funding, are a very different kettle of fish. They connect organisations who need highly technical data analysis to a community of highly technical data analysts, which sounds like a good fit to me. The community of individuals and teams who enter competitions here are often PhD students, and naturally the rewards on offer tend to be in the thousands of dollars rather than in the hundreds.

With representatives from Stanford University, Google and PayPal involved in the funding round this feels like a high profile endorsement for both the crowdsourcing concept in general, and particularly the competition platform model. Moreover clients using the platform have included NASA.

The timing’s also good. With the term “big data” likely to be one of the business buzzwords for 2012, and utilizing insights gained from large datasets a potential commercial differentiator in the future, Kaggle may come into focus in the following months.

It remains to be seen whether these two examples of competition platforms will give established agencies and specialists in the world of graphic design and data analysis a run for the money, but the crowdsourced competitions they run something feel quite different. Perhaps mildly disruptive, perhaps even a subtle game-changer in some quarters. If they are not the competition at present, they could be in the future.